DoD's $52.7M non-recurring ducted rocket effort awarded to Northrop Grumman, lacking competition

Contract Overview

Contract Amount: $52,717,239 ($52.7M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2014-10-10

End Date: 2018-07-23

Contract Duration: 1,382 days

Daily Burn Rate: $38.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: NON-RECURRING DUCTED ROCKET EFFORT

Place of Performance

Location: CHANDLER, MARICOPA County, ARIZONA, 85248

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $52.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: NON-RECURRING DUCTED ROCKET EFFORT Key points: 1. Contract awarded on a sole-source basis, raising concerns about price discovery and potential overpayment. 2. Significant duration of over 3 years suggests a complex and potentially evolving project. 3. Cost-plus-fixed-fee structure may incentivize cost overruns, requiring robust oversight. 4. The contract falls under Guided Missile and Space Vehicle Manufacturing, a critical defense sector. 5. Awarded by the Department of Defense, indicating a focus on national security capabilities. 6. Lack of small business involvement noted, potentially limiting broader economic impact.

Value Assessment

Rating: questionable

The contract's value of $52.7 million for a non-recurring effort is difficult to benchmark without specific technical details. However, the sole-source award and cost-plus-fixed-fee structure present inherent risks to achieving optimal value for money. Without competitive pressure, the pricing may not reflect the most economical approach. Further analysis would require comparing the cost components to similar, albeit likely classified, development efforts in advanced propulsion systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when a specific technology or capability is unique to a single provider, or for reasons of national security. The lack of multiple bidders means that the government did not benefit from the price reductions and innovation that typically arise from a competitive bidding process.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competition. Without competing offers, there is less assurance that the negotiated price represents the best possible value.

Public Impact

The primary beneficiary is the Department of Defense, which gains access to advanced rocket propulsion technology. The services delivered involve research, development, and manufacturing of a ducted rocket system. The contract's geographic impact is centered in Arizona, where Northrop Grumman's facility is located. Workforce implications include specialized engineering and manufacturing roles within Northrop Grumman.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential for taxpayer savings.
Cost-plus-fixed-fee contract type can incentivize higher costs if not managed tightly.
Lack of transparency inherent in sole-source defense contracts makes independent value assessment challenging.
Long contract duration (over 3 years) increases exposure to cost fluctuations and potential scope creep.
No small business set-aside indicates limited direct benefit to the small business industrial base for this specific award.

Positive Signals

Award to a major defense contractor like Northrop Grumman suggests alignment with established capabilities and potential for successful execution.
Focus on advanced propulsion technology addresses critical defense modernization needs.
The contract is for a non-recurring effort, implying a defined scope for a specific technological advancement.
The definitive contract type provides a framework for the agreement, though the cost-plus-fixed-fee element requires careful monitoring.

Sector Analysis

The Guided Missile and Space Vehicle Manufacturing sector is a highly specialized and critical component of the defense industrial base. Spending in this area is driven by national security priorities and technological advancement. Contracts are often complex, long-term, and involve significant R&D investment. Benchmarking is difficult due to the classified nature of many programs, but this contract represents a specific investment in advanced propulsion technology within a broader ecosystem of aerospace and defense manufacturing.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have significant subcontracting requirements for small businesses based on the provided data. This means the direct economic benefits for the small business ecosystem from this specific award are likely minimal. Larger prime contractors typically manage their own supply chains, and while they may engage small businesses, it's not a primary focus of this particular contract's structure.

Oversight & Accountability

Oversight for this contract would fall under the Department of Defense, likely managed by the Defense Contract Management Agency (DCMA). The cost-plus-fixed-fee structure necessitates rigorous financial oversight to ensure costs are reasonable and allocable. Accountability measures would involve performance reviews, milestone tracking, and audits. Transparency is limited due to the sole-source nature and potential classification of the technology, but reporting requirements would be defined in the contract.

Related Government Programs

Guided Missile Manufacturing
Space Vehicle Manufacturing
Advanced Propulsion Systems Development
Department of Defense Research and Development
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competition
Potential for cost overruns
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $52.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. NON-RECURRING DUCTED ROCKET EFFORT

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN SYSTEMS CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $52.7 million.

What is the period of performance?

Start: 2014-10-10. End: 2018-07-23.

What is the specific technological advancement sought by the 'NON-RECURRING DUCTED ROCKET EFFORT'?

The provided data does not specify the exact technological advancement. However, 'ducted rocket' typically refers to a type of air-breathing rocket engine that uses ambient air as a component of its propellant, potentially offering advantages in terms of range, speed, or efficiency compared to traditional rockets, especially at certain altitudes. 'Non-recurring' implies this is for initial development, design, prototyping, or testing of a new system rather than ongoing production or sustainment.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for R&D efforts?

The Cost-Plus-Fixed-Fee (CPFF) contract type is common for research and development where the scope is not fully defined, making it difficult to establish a firm fixed price. Under CPFF, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. While it allows flexibility for evolving R&D, it shifts cost risk to the government. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers less incentive for the contractor to control costs, as the fee is fixed regardless of the final cost. However, it provides more certainty than Cost-Plus-Incentive-Fee (CPIF) or Cost-Plus-Award-Fee (CPAF) contracts, which include performance-based incentives.

What are the potential risks associated with a sole-source award for a defense contract of this magnitude?

Sole-source awards, especially for significant amounts like $52.7 million, carry several risks. Primarily, the absence of competition can lead to higher prices than might be achieved through a competitive process, as the contractor faces less pressure to be cost-efficient. There's also a reduced incentive for innovation beyond what is strictly necessary to meet the contract's minimum requirements. Furthermore, it can create a dependency on a single supplier, potentially limiting future options or increasing vulnerability if that supplier faces issues. Robust government oversight and negotiation are critical to mitigate these risks.

What is Northrop Grumman's track record with similar defense contracts?

Northrop Grumman Systems Corporation is a major defense contractor with extensive experience in aerospace, defense, and information systems. They have a long history of developing and producing complex systems, including missiles, spacecraft, and advanced aircraft. While specific details of their past ducted rocket or similar propulsion system contracts are often classified or not publicly detailed, their overall track record indicates significant capability in managing large, technologically advanced defense programs. Performance can vary across contracts, but they are generally considered a capable prime contractor within the industry.

How does the $52.7 million award compare to typical spending in Guided Missile and Space Vehicle Manufacturing?

The $52.7 million figure for a non-recurring development effort is substantial but falls within the typical range for advanced R&D projects in the Guided Missile and Space Vehicle Manufacturing sector. Major defense programs, especially those involving novel technologies like advanced propulsion, often require investments in the tens or hundreds of millions of dollars for initial development phases. This amount is not exceptionally high or low in the context of developing cutting-edge defense capabilities, but its justification is heavily dependent on the specific technological goals and the competitive landscape (or lack thereof).

What oversight mechanisms are typically in place for Cost Plus Fixed Fee contracts awarded by the DoD?

For Cost Plus Fixed Fee (CPFF) contracts awarded by the Department of Defense (DoD), oversight is typically multi-faceted. The Defense Contract Management Agency (DCMA) plays a crucial role in monitoring contractor performance, costs, and compliance. This includes reviewing incurred costs, ensuring they are allowable, allocable, and reasonable according to Federal Acquisition Regulation (FAR) guidelines. Program managers within the DoD agency that awarded the contract are responsible for technical oversight, ensuring the contractor meets performance milestones and objectives. Financial audits by agencies like the Defense Contract Audit Agency (DCAA) may also be conducted. Transparency is often limited by the nature of defense work, but reporting requirements are contractually mandated.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001914R0003

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 1575 SOUTH PRICE RD, CHANDLER, AZ, 85286

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $52,717,239

Exercised Options: $52,717,239

Current Obligation: $52,717,239

Subaward Activity

Number of Subawards: 155

Total Subaward Amount: $147,887,922

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline